Two-sided online platforms are typically plagued by hidden information (adverse selection) and hidden actions (moral hazard), limiting market efficiency. Under the context of the increasingly popular online labor contracting platforms, this dissertation investigates whether and how IT-enabled monitoring systems can mitigate moral hazard and reshape the labor demand and supply by providing detailed information about workers’ effort. In the first chapter, I propose and demonstrate that monitoring records can substitute for reputation signals such that they attract more qualified inexperienced workers to enter the marketplace. Specifically, only the effort-related reputation information is substituted by monitoring but the capability-related reputation information. In line with this, monitoring can lower the entry barrier for inexperienced workers on platforms. In the second chapter, I investigate if there is home bias for local workers when employers make the hiring decisions. I further show the existence of home bias from employers and it is primarily driven by statistical inference instead of personal “taste”. In the last chapter, I examine if females tend to have a stronger avoidance of monitoring than males. With the combination of the observational data and experimental data, I find that there is a gender difference in avoidance of monitoring and the introduction of the monitoring system increases the gender wage gap due to genders differences in such willingness-to-pay for the avoidance of monitoring. These three studies jointly contribute to the literature on the online platforms, gig economy and agency theory by elucidating the critical role of IT-enabled monitoring.

Due to the growing popularity of the Internet and smart mobile devices, massive data has been produced every day, particularly, more and more users’ online behavior and activities have been digitalized. Making a better usage of the massive data and a better understanding of the user behavior become at the very heart of industrial firms as well as the academia. However, due to the large size and unstructured format of user behavioral data, as well as the heterogeneous nature of individuals, it leveled up the difficulty to identify the SPECIFIC behavior that researchers are looking at, HOW to distinguish, and WHAT is resulting from the behavior. The difference in user behavior comes from different causes; in my dissertation, I am studying three circumstances of behavior that potentially bring in turbulent or detrimental effects, from precursory culture to preparatory strategy and delusory fraudulence. Meanwhile, I have access to the versatile toolkit of analysis: econometrics, quasi-experiment, together with machine learning techniques such as text mining, sentiment analysis, and predictive analytics etc. This study creatively leverages the power of the combined methodologies, and apply it beyond individual level data and network data. This dissertation makes a first step to discover user behavior in the newly boosting contexts. My study conceptualize theoretically and test empirically the effect of cultural values on rating and I find that an individualist cultural background are more likely to lead to deviation and more expression in review behaviors. I also find evidence of strategic behavior that users tend to leverage the reporting to increase the likelihood to maximize the benefits. Moreover, it proposes the features that moderate the preparation behavior. Finally, it introduces a unified and scalable framework for delusory behavior detection that meets the current needs to fully utilize multiple data sources.